Employer Action Code: Act
The Dutch government has released for public consultation draft legislation to transpose the provisions of EU Directive 2023/970 on Pay Transparency into national law. The directive aims to strengthen enforcement of equal pay for equal work, to address the gender pay gap that persists in virtually all EU member states. In the Netherlands, average gross earnings of women employed in the private sector were 18% less than those of men in 2023 (Eurostat data). The draft legislation, which would amend three existing laws, is based closely on the directive and largely follows the text as published in the Official Journal of the European Union without further enhancing its requirements. The draft amendments do in some instances leaves more room for interpretation compared to the EU Directive. This has been flagged by numerous respondents (including WTW) during the public consultation process.
Key details
The draft legislation contains various new requirements for employers, including:
- All employers (defined as the employing entity) would be required to have formal salary structures for all positions within their organizations linked to a clustering of positions of the same or similar value based on objective gender-neutral criteria, such as skills, accountabilities/responsibilities and working conditions. Using a job evaluation methodology is seen as the best way to assess work of equal value, but it would not be a legal requirement
- All employers would have to ensure that employees have easy access to the criteria that determine pay and benefit levels. At an employee’s request, the employer would be required to disclose the average pay levels, split by gender, for the employee’s category of worker. Employers would have to inform employees of this right annually together with information on how to execute this right. No minimum sample size for categories of workers would apply
- Companies with 50 or more employees would need to make accessible the criteria used to determine employee salary progression
- Companies with 100 or more full-time employees (including temporary workers supplied by employment agencies) would be required to report gender pay gaps for the employing entity and for categories of workers to their employees, employees’ representatives and the designated public authority. This reporting obligation would apply annually to companies with 250 or more employees (starting from 2027) and once every three years to companies with 100–249 employees (starting from 2027 for 150–249 workers, or 2031 for 100–149 workers). Pay would be defined as the combination of all pay and benefits elements, except where components cannot be derived individually or are available to all employees in the same way (e.g., work wear and company parties). Pay and benefits would be valued based on amounts paid or value received in the prior calendar year. Further guidance on pay elements to be included in the reporting and valuation would be issued at a later date
- Based on the above, if a category of workers has a gender pay gap of 5% or more that cannot be explained by objective gender-neutral factors and the gap has not been remedied within six months, the employer would be obligated to carry out a salary evaluation together with the Works Council to determine if gender-based discrimination is the cause of the gap. The Works Council would also confirm the validity of the job categories, the objective and gender-neutral criteria, the overall accuracy of the pay gap reporting and the remediation approach. Senior management of the organization would need to confirm the accuracy of the information included in the gender pay gap reporting. In case the gender-pay reporting and evaluations would require changes to existing collective bargaining agreements, the relevant social partners would also need to be involved
- Employers would be required to disclose to candidates either the exact pay rate or pay range of the open position before the first interview and would be prohibited from inquiring into candidates’ pay history
Employer implications
Employers should monitor the legislative progress of the draft legislation and prepare for its likely implementation. The mandates for additional transparency on various compensation data and reward policies would naturally require employers to develop and maintain a qualifying database and reporting system. Note: Employers with 50 or more workers must have a Works Council. Smaller employers that do not have a Works Council should be able to meet the provisions of the directive on their own.
The current planned implementation date is June 7, 2026, roughly in line with the three-year transposition period (plus one-year implementation period) provided for in the directive. This would apply to the provisions relating to transparency on hire, transparency on pay criteria and the employee right to request information. The first gender pay reports, covering pay gaps by entity and category of worker, would be due on June 7, 2027, for companies with 150 or more employees, and on June 7, 2031, for companies with 100–149 employees. The reports would cover worker pay data (including employer paid benefits) for calendar year 2026.
